And so it begins again. An information request from the EU to three countries seeking further details about their tax systems – which is a regular feature of EU interaction with member states – triggers a slew of stories and commentary about “tax deals”, “tax havens” and a broad denigration of the Irish tax system. Frankly, it’s sloppy, misleading and downright incorrect.

Let's nail the tax haven argument. Ángel Gurría, head of the OECD, came out this week and emphatically said Ireland was not a tax haven, quoting the key criteria the OECD applies to national tax systems. That's not enough for some people, who might prefer their own definitions. "When I use a word, it means just what I choose it to mean," as Humpty Dumpty might say.

However, one objective measure might be the number of countries willing to do business with us by signing a bilateral double taxation agreement. How many does Ireland have as of today? No fewer than 69, including all the major trading partners. So none of these countries thinks we’re a tax haven.

Maybe Ireland is a tax haven because it does “deals” around the rate of tax which companies pay. This is not true, as confirmed by everyone from the Taoiseach to Revenue and departmental officials.

'Double Irish'
Why do these stories persist? The answer lies with a combination of the now infamous "double Irish" and lazy accounting. As it has done since the inception of the State, Ireland taxes companies that are resident ("managed and controlled") here on their worldwide profits. The concept of management and control denotes where the board of directors makes key decisions affecting the entity's affairs. If a company isn't resident here, it is still taxed here on the activities that take place in Ireland or on its Irish income.

A company that is incorporated in Ireland but has no Irish directors, no Irish presence, no Irish employees, no Irish activities, no Irish income, no Irish assets, in fact nothing to do with Ireland other than where it was “born”, has no liability to Irish tax under the law. So, when you read that company X has done “a deal” to get, say, a “3 per cent” rate, someone is talking about Irish tax expressed as a percentage of Irish taxable profits plus the profits of a company that has nothing to do with Ireland or has no Irish activities. In other words, it is a meaningless number.

Transfer pricing rules
What can be said with absolute certainty is that every company within the charge to Irish tax pays tax at 12.5 per cent on their activities – that is a fact. In addition, since 2010 we also have OECD standard transfer pricing rules, which give Revenue the power to ensure that the profits reported by a company are commensurate with the risks, functions and activities of the Irish entity.

There is no doubt that in the current global tax debate the concept of having an Irish incorporated entity, albeit one with no Irish connections, being outside the charge to Irish tax, looks incongruous.

My belief is that, within two years, we will enter a phase-out stage of this concept. However, in the overall scheme of things, and having regard to US and OECD tax developments, Ireland will still be an extremely attractive location for FDI.

What do I believe the EU will conclude from the information it has sought from Ireland? First and foremost, they will find that Ireland operates an open and transparent legislative-based tax system that does what it says on the tin. A company pays tax at 12.5 per cent on its income with no special deals on the rate. It will find that – as happens in many countries – companies look to Revenue for some certainty that the profits it will report are commensurate with, and appropriate to, the footprint of the company here. It will find a tax system operated to the highest standards. In short, I don’t believe any investigation will follow this information-gathering exercise. But, in future, we need to be a lot less supine in our defence of the Irish tax system so that the next time the “tax haven” story rears its head, we’re much quicker to shoot it down.

Feargal O’Rourke is head of tax at PwC Ireland. @feargalorourke